Scale economies in local public administration

Abstract

A renewed interest in decentralisation has profoundly affected local public governance around the world. Faced with an increasing number of tasks, Dutch municipalities have recently sought physical centralisation, merging into larger jurisdictions in order to target new policy areas more effectively and cost efficiently. Is such a policy of physical centralisation wise? We study economies of scale in local public administration, and findgiven transfer payments from central government and current cooperation between municipalities and after controlling for geographical, demographic and socioeconomic variablessubstantial unused scale economies of 17% for the average municipality. Between 2005 and 2014 the optimum size of municipalities increases from around 49,000 to 66,260 inhabitants, pointing at an increased importance of fixed costs relative to variable costs in local public administration.

Why voluntary municipal merger projects fail: evidence from popular votes in Switzerland

“…For certain public goods, unit costs can be lowered with production at a larger scale (Bikker and Van der Linde 2016). A merger would thus allow municipalities to save costs (Steiner and Kaiser 2017 voters ultimately base their decision on.…”

Organizational Design in Open Government: Two Cases from the United Kingdom and the United States

“…Thus, the fourth major design decision concerned appointment of an information agency tasked with standardization of information and data coordination processes. This finding makes sense from the perspective of government decision makers because the merging into vertical systems of regional control is meant to address problems of increasing numbers of government tasks and an effort to be more efficient through standardization (Bikker & van der Linde, 2016;Jacot-Descombes & Niklaus, 2016). Much scholarship supports the concept that technology-oriented organizational design may have an internal drive toward vertical standardization processes due to the trend toward information control and economies of scale in government communications systems (Dunleavy, Margetts, Bastow, & Tinkler, 2006).…”

Was It Worth It? The Territorial Reform in the Canton of Glarus

“…There are various arguments for centralisation versus decentralisation, and for the territorial size of governmental structures to be smaller or bigger (Baldersheim and Rose : 234; Eichenberger : 404; Gómez‐Reino and Martinez‐Vazquez : 17). According to the decentralisation theorem (Oates : 351; Oates ), fiscal responsibilities should be structured on a decentralised, federal basis (subsidiarity principle) as long as centralisation does not result in cost savings or other advantages (Bikker and Van der Linde : 443).…”

“…: 816). Centralised systems are not able to respond to heterogeneity in preferences (Bikker and Van der Linde : 442).…”